How the role of packagers is changing in specialist lending

With this changing landscape of growing regulatory and product complexity, Specialist Lending Solutions asked about the evolving role of master brokers and packagers in specialist arenas.

Dale Jannels (pictured), All Types of Mortgages (AToM) managing director said the increasingly specialised market means packagers are “coming back with a vengeance”.

Jannels told Specialist Lending Solutions that packagers’ value lies in specialist knowledge of how lenders operate, and the distribution through broker channels to push specialist products – arguing that their expertise gives them a unique position to place complex deals.

“You ask a lender what’s the conversion rate from a broker compared to a packager, I guarantee ours would be double what the broker’s is,” he said.

“We know how to deal with lenders on a day-to-day basis, we know what they want, what they will and won’t accept.

“Lenders are realising the value that packagers bring to the market. We’re saving time and effort, everything is tickboxing a quicker referral.”

A matter of time

On top of the expertise, brokers simply do not have the time to scrutinise specialist cases, Jannels continued.

“You’re under a lot of pressure as a broker to get things through, because that’s going to put the bread and butter on your table at the end of the month,” he said.

Jane Benjamin, head of relationship management at Sesame and PMS, added: “As mortgage business has become more complicated to advise on and process, mortgage advisers have been weighed down with time pressures.

“There are only so many hours in a day, so if something is outside of an adviser’s comfort zone then it could be in everyone’s best interests for that customer to be referred on to a specialist.”

Stick to their knitting

However, while David Copland, director of TMA Mortgage Club, acknowledged the utility of packagers to deal with niche cases, he cautioned against their over expansion, saying packagers should “stick to their knitting”.

He said: “As the market began to come back [after the credit crunch] the risk-rewards equation began to change, and as competition returned to the market lenders began to look for niches that would return them a good margin.”

“My worry is that [packagers] all seem to be expanding into other fields, which is great if they have the specialist personnel on their team, but dangerous if they are branching out too early.”

Copland added that packagers could improve by clarifying the area of client hand-off, and defining who is responsible for the advice, or where it is non-regulated.

Impossible to cover it all

Jo Breeden, managing director of Crystal Specialist Finance, said that packagers provide a net for covering all bases in a growing and complex market, but it was not for the lack of skill from brokers.

“The market is now much more diverse, so by turning to a specialist distributor the broker can ensure they have covered all bases,” said Breeden.

He continued: “I don’t think it’s so much that brokers lack the expertise, simply that the market is so large and varied that it is almost impossible to be an expert in everything all the time.

“The client is looking for a solution, the broker’s job is to find that. A specialist distributor widens that product offering meaning a full service can be realised.”